REE Supply and Demand

The supply of rare earths is dominated by China, which provides 97% of the world’s production. However, China only has 48% of the world’s known reserves of rare earths, according to the USGS Mineral Commodity Summaries 2011. Due to industry consolidation and stricter environmental regulations, China has imposed export quotas on rare earths. Effectively this creates two separate rare earth markets, one internal to China and one for the Rest-of-World (ROW). The Chinese export quota amount therefore defines the majority of supply for the ROW.

Dudley Kingsnorth is a world-recognized expert on the rare earth market. Mr. Kingsnorth’s supply and demand forecast is shown in Figure 1. By 2015, he forecasts that Chinese supply will have increased to 140,000 tonnes per year. With the advent of ROW supply from corporations such as Lynas Corp, Molycorp, and GWMG, the total supply of rare earths will reach approximately 190,000 tonnes. Mr. Kingsnorth forecasts global demand for rare earth oxides at 170,000 tonnes in 2015. This indicates a supply surplus in 2015 of approximately 20,000 tonnes of total rare earth oxide.

It is important to remember that the supply and demand data presented in Figure 1 are for the combined production and demand of all rare earths. However, the complication in rare earth supply and demand calculations is that each rare earth element has different end uses and applications, and is produced in different quantities. This means that certain rare earths, including Neodymium, Europium, Terbium, Dysprosium, and Erbium will be in a supply deficit, while more abundant rare earths such as Lanthanum and Cerium will be in a surplus.

Source: D. Kingsnorth/IMCOA (2011)

As discussed above, not all rare earth elements are used in all applications. Table 1 shows rare earth demand in 2010 and 2015 for end-use applications, aggregated from various sources. These data demonstrate the wide variety of applications for rare earths, and also show that demand inside China is growing at a faster rate than demand outside of China. By 2015, it has been forecast that China’s demand will be 65% of world production vs. 54% in 2010, while ROW demand, despite increasing, represents only 40% global demand in 2015 vs. 46% of global demand in 2010.

Table 1: Rare Earth Demand by Application. Sources: IMCOA, Roskill, Lynas Corp. using info from industry participants.


REE Application REO Used 2010 Demand

2015f Demand

Permanent Magnets Nd, Pr, Dy, Tb, Sm 32,000 48,000
NiMH Batteries, metallurgical La, Ce, Pr, Nd 28,000 35,000
Catalysts Ce, La, Pr, Nd 30,000 28,500
Phosphors Eu, Y, Tb, La, Dy, Ce, Pr, Gd 8,000 13,000
Polishing Powders Ce, La, Nd, mixed 20,000 30,500
Glass Additives Ce, La, Nd, Er, Gd, Yb 11,000 11,000
Ceramics, other Mixed 5,000 19,000
Total   134,000 185,000
Chinese Demand   72,000 (54%) 117,500 (60%)
ROW Demand   62,000 (46%) 74,000 (40%)



The data in Figure 1 and Table 1 show that until significant rest-of-world production comes on-stream in the next three to five years, there will be a near-term supply shortfall for ROW rare earth users. Both the short- and medium-term supply/demand balance for rare earths depend heavily on Chinese export and domestic production policies, due to the overwhelming Chinese domination of rare earth supply. This is further reinforced by the current lack of rare earth production infrastructure and processing knowledge in the rest of the world. Also, because each rare earth deposit is unique and contains the various REEs in different proportions, individual elements are produced in different quantities. Some rare earths may be in short supply even though the total supply is forecast to exceed total demand by 2015.